Parathyroid hormone-related peptide (PTHrP) is a critical regulator of vertebrate growth plate development. Hedgehog (Hh) signaling is known to increase PTHrP expression in the growth plate chondrocytes. However, the mechanisms by which Hh regulates PTHrP expression have not been elucidated. Since Hh signaling is mediated by the Gli family of transcription factors, we examined the effects of the Gli family members on PTHrP expression in growth plate chondrocytes. We found that full length Gli2, but not full length Gli3, is a powerful activator of PTHrP promoter activity. Importantly, a naturally occurring truncated form of Gli3, which has been postulated to act as a repressor, inhibits Gli2-induced PTHrP promoter activity, suggesting that the control of Gli3 processing is an important step in the regulation of PTHrP expression. Regulation of proteasomal processing of Cubitus interruptus (the drosophila ortholog of Gli) by the E3 ubiquitin ligase, Slimb, to a truncated repressor form is an important step in the regulation of Hh signaling in drosophila. Our hypothesis is that the Gli proteins regulate PTHrP expression and that beta-TrCP, the mammalian homolog of Slimb, is involved in the regulation of Gli3 processing, and therefore regulation of PTHrP expression. We propose the following Specific Aims 1) To determine the molecular mechanisms by which Gli2 stimulates the PTHrP promoter and mediates Hh signaling in chondrocytes and 2) To elucidate the role of the E3 ligase beta-TrCP in the processing of G1i3 and regulation of PTHrP expression and growth plate development in vivo.